Bringing Business Back
Offshoring in manufacturing dates back to the 1960s and saw huge amounts of manufacturing activities moved to countries with cheaper labour costs, especially in Asia. China, in particular, became the world’s factory due to its vast labour pool, lower wages, and established manufacturing infrastructure.
According to the Organisation for Economic Co-operation and Development (OECD), the late 1990s into the 2010s saw the offshoring of routine IT work evolving into high-value activities such as R&D, product design, and engineering.
However, in recent years the pros of offshoring have struggled to measure up against the cons. As Jonty Bloom puts it in an article for the BBC, “The motives for this shift are complex and varied, but break down into three main groups – economics, risk and politics.”
Events such as the COVID pandemic, international conflicts and dwindling water levels in the Panama Canal have revealed the vulnerabilities of international supply chains. Moreover, as labour costs in developing countries rise and political tensions brew, manufacturers are deciding to move operations back to friendlier countries.
This phenomenon is gaining momentum due to a confluence of economic, political, and technological factors. The restoration trend in manufacturing represents not only an economic recalibration but also a significant transformation in how industries approach production, supply chains, and innovation.
